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Risk Scenario

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Let’s Ditch Weather Complacency

Currently Chief Executive of the Americas for XL Catlin’s insurance operation, Joe Tocco has enjoyed three decades in the insurance industry at various organizations. He is also a veteran of the U.S. Navy, where he served as a nuclear field service engineer. He can be reached at [email protected]

In the Houston area alone, recent torrential rains and the subsequent flooding resulted in at least $45 million in property damage.

Weather complacency worries me more than 100 mph winds.

Now we’re in the midst of hurricane season. It’s expected to be a quiet one.

Some breathed a sigh of relief on that prediction. I didn’t.

Instead, I got a little worried because it often means we get complacent. We’re satisfied with how things are; we don’t take precautions or look for improvements.

Weather complacency worries me more than 100 mph winds.

Complacency can be costly at any time of the year. Consider this — one in four businesses forced to close for at least 24 hours because of a disaster never reopens.

That’s one of the big lessons from Sandy, where power outages were widespread and many businesses had to shut down for multiple days or weeks.

Extreme weather appears to be happening more frequently. Chalk it up to global warming, El Nino, rising sea levels, or whatever.

Taking all of these factors together, our properties are more vulnerable today than they were a decade ago … or yesterday, for that matter. For one, we have built many properties along shorelines where rising sea levels have made storm surge a greater concern. Secondly, extreme weather hits in areas that in past were relatively unscathed, whether from tsunamis to tornadoes to drought.

Now we’re in the midst of hurricane season. It’s expected to be a quiet one. Some breathed a sigh of relief on that prediction. I didn’t.

So the question is, do we enjoy a potentially quiet hurricane season or do we take action, shake off weather complacency and boost our weather resilience? Here’s what I’m thinking:

Let’s reinforce what needs reinforcing. Go all-out for continual improvement. Your insurer’s property loss prevention team can offer guidance on ways to make your buildings more water-tight, wind resistant and fire-retardant, to make sure roofs can hold heavy loads of snow. Ask them.

Strive for above average. Building codes are considered minimum legal standards that focus on occupant safety, not preserving building use, ensuring reuse or business continuity. At www.disastersafety.org, the Insurance Institute of Business and Home Safety (IBHS) offers business guidance during new construction or remodeling to improve and/or enhance the physical strength of their commercial structures with design features and construction practices that go beyond building codes.

Don’t be a sitting duck. Storms don’t always give a lot of warning but they often require action — boarding up windows, securing equipment, and moving things that could be harm’s way — so you have to be ready to take action. During Sandy, many art galleries in the NY’s Chelsea neighborhood suffered significant losses of art stored in basements. You can bet they have storage contingency plans now. Whether it’s art, vehicles or equipment, storing on higher ground — or in totally different locations — can prevent losses.

Have backup plans. Following Sandy, my office in downtown Manhattan was inaccessible for a week. With advance planning by our business continuity management team, we were able to relocate to other offices or hotels or work remotely to keep our business operating as usual, at a time when many of our clients needed us to be fully operational.

No one really knows what the 2015 hurricane season, much less what tomorrow’s weather, will bring. But we do know that it can be costly to just sit back and do nothing. If there are actions that can be taken to prevent the worst from happening, let’s take them.

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Violence in health care settings occurs with rising frequency, costing facilities, insurers and society dearly, but many incidents can be deterred – and many facilities already have the tools to exert the deterrence.

As bearers of bad and even heartbreaking news, doctors and other caregivers are at high risk for assaults and “active shootings.”

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With 154 hospital-related shootings between 2000 and 2011 that left 235 dead or injured, according to the American College of Emergency Physicians, “we’re on notice for the potential for violence,” said Pamela Popp, executive vice president/chief risk officer, Western Litigation.

Health care workers are injured through violent acts at more than four times the national rate, according to the Bureau of Labor Statistics. FBI statistics show a rising trend in active shooter incidents in health care settings, from 6.4 per year between 2000 and 2006, to 16.4 per year between 2007 and 2013.

Those are scary numbers. But there are tools to forestall violent acts in hospitals and some of them don’t cost that much.

“Empathetic communication is key,” said John Walpole, area senior vice president, Arthur J. Gallagher & Co. The techniques that help hospital medical staff de-escalate situations and repair broken conversations can also help front-line employees.

“We can’t wait for something to happen. We have to have a prepared response.” — Pamela Popp, executive vice president/chief risk officer, Western Litigation

“The good news is that organizations can use their own low-cost resources,” he said.

Taking Corrective Action

Complacency is dangerous, Walpole warned, and risk managers shouldn’t assume their facilities are doing everything that can be done to keep employees safe.

“Run a drill, take corrective action and then test it with another drill. Keep monitoring.”

Hospitals have considerable experience with infant abduction drills, he said, and now those processes must be applied to emergency room violence and active shooter scenarios.

“We can’t wait for something to happen. We have to have a prepared response,” Western Litigation’s Popp said.

That means, she said, that senior management should dedicate security resources. Even if organizations can’t afford onsite security personnel, they should talk to their crime, malpractice and general liability carriers about prevention, both through incident de-escalation and securing the facility.

They may qualify for grants through Homeland Security and FEMA programs.

“Risk managers may assume they have it under control,” but after a safety audit may “find they’re not quite as prepared as they thought.” — Beth Berger, managing director, healthcare practice, Arthur J. Gallagher & Co.

Insurance brokers, carriers and consultants also play a role in workplace and patient safety training, said Beth Berger, a managing director with Arthur J. Gallagher’s Healthcare Practice.

But Berger said the broker community doesn’t always offer these services and clients often don’t ask for them.

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“There should probably be more discussion up-front with brokers and carriers,” she said.

“Risk managers may assume they have it under control,” but after a safety audit may “find they’re not quite as prepared as they thought.”

Government agencies and nonprofit organizations, including the Occupational Safety and Health Administration, the Centers for Disease Control, the Joint Commission and the American Hospital Association, also offer free or low-cost resources.

Which Coverage Responds?

While active shooters grab headlines and represent a very real threat, they are hardly the only source of violence in U.S. hospitals and other health care facilities. Which coverage responds depends on the situation: where the incident occurred, who perpetrated it, and who or what was injured or damaged.

In a true crime situation, Popp said, the general liability or captive coverage could respond, assuming one or the other covers crime. If not, facilities can buy violent and malicious acts (crime) coverage, which picks up expenses that wouldn’t fall under a property policy.

“Total losses in an incident are hard to calculate and often underestimated.” — Pamela Popp, executive vice president/chief risk officer, Western Litigation

In patient-on-worker crime, workers’ compensation responds. If other patients are hurt in the event, general liability responds, as is the case with property damage (such as cars caught in the crossfire during a parking lot shooting).

In some cases, losses won’t be covered, and facilities should expect to make payments from the operations budget.

The scenarios are endless, said AJG’s Berger. A stranger with criminal intent mugs a visitor in a parking lot. A grieving relative assaults a nurse. An agitated and disoriented senior in a nursing home strikes a nurse.

Then, there’s worker-on-worker assault, or the angry ex-spouse marching in with a weapon. If an innocent bystander becomes collateral damage in any of these assaults, the insurance questions multiply.

When working through a violence prevention plan when an incident is still theoretical, Popp recommends identifying which coverage will apply in a variety of scenarios.

“After an event, there’s so much chaos and emotions are so high that you’ll be too distracted to figure it out then.”

Total losses in an incident are hard to calculate, Popp said, and often underestimated. The cost of medical care for an injured staff member averages $90,000, and the total cost of an incident could easily reach $500,000 to $1 million when the myriad, often-forgotten peripheral expenses are included.

Popp calculates the total cost of a violent incident by including treatment for:

Leaders should ask themselves, ‘Is our facility safe? Are we at least keeping up with safety standards of other facilities in the area?’ ” Failure to do so, she said, not only violates the social contract that says that hospitals are safe places, but it also casts uncertainty on insurance coverage.

“We can’t tell ourselves, ‘It won’t happen here.’ ”

Susannah Levine writes about health care, education and technology. She can be reached at [email protected]

Integrating medical management with pharmacy benefit management is the Holy Grail in workers’ compensation. But getting it right involves diligence, good team communication and robust controls over the costs of monitoring technology.

Risk managers in workers’ compensation can feel good about the fact that opioid use is declining slightly. But experts who gathered for a pharmacy risk management roundtable in Philadelphia in June pointed to a number of reasons why workers’ compensation professionals have more than enough work cut out for them going forward.

For one, although opioid use is declining, its abuse and overuse in legacy workers’ compensation claims is still very much a problem. An epidemic rages nationally, with prescription drug overdose deaths outpacing those from the abuse of heroin and cocaine combined.

In addition, increased use of compound medications and unregulated physician dispensing are resulting in price gouging and poor medical outcomes.

Although individual states are attempting to address the problem of physician dispensing of prescriptions in workers’ comp, there is no national prohibition against it: That despite substantial evidence that the practice can result in ruinous workers’ compensation medical bills and poor patient outcomes.

“The issue is that there isn’t enough formal evidence to indicate improved outcomes from the use of compounds or physician dispensed drugs, and there are also legitimate concerns with patient safety,” said roundtable participant Jim Andrews, executive vice president, pharmacy, for Duluth, Ga.-based pharmacy benefit manager Healthcare Solutions.

Whereas two years ago, topical creams and other compounds with two to three medications in them were causing concern, now we’re seeing compounds with seven or more medicines in them.

How those medicines are interacting with one another, and in the case of a compound cream, how quickly they’re being absorbed by the patient, are unknowns that are creating undue health risks.

“These medicines haven’t been tested for that route of administration,” Dragoun said.

In other words, the compounds have not been reviewed or approved by the FDA.

Carol Valentic, vice president of cost containment and medical management with third-party administrator Broadspire, said her company’s approach to that issue is to send a letter to providers, through the company’s pharmacy benefit administrator, alerting them to the fact that compounds are not FDA-approved and could be dangerous.

Other roundtable participants said they employ utilization review of every prescribed compound medication. They’re finding that the inflation of the average wholesale price for prescriptions that pharmacy benefit managers are battling in the case of single medications is happening with compounds as well, to the surprise of probably no one.

Kim Clark, vice president of utilization management with Patriot Care Management Inc., a division of Patriot National, Inc., said Patriot has their own software, DecisionUR, and opioids as well as compound prescriptions can be directed from the PBM to Utilization Review.

In the area of new worries in workers’ compensation, and there are plenty of them, Dragoun also pointed to the introduction of extremely high cost, albeit extremely effective specialty medications, such as those being used to treat Hepatitis C. Treatments in this area can run into the hundreds of thousands of dollars.

Domestic drug manufacturers, pressed to pursue profits as their product lines mature and their margins level off, are jockeying for dominance in this area.

“This seems to be a route that a lot of drug makers are going after. Very narrow markets but with extremely high cost medications,” said Deborah Gleason, clinical resources manager, medical programs, with ESIS, the Philadelphia-based third-party administrator that is part of ACE Group.

Tools of the Trade

Given how substantially the use of prescriptions can balloon the cost of a workers’ compensation claim and undermine outcomes, a number of tools are in the market that can help risk managers rein in costs.

One is urine drug monitoring, which can catch cases of drug diversion, or instances where an injured worker is ingesting unprescribed substances. But the use of that test can create its own problems, namely overutilization.

Gleason, with ESIS, Inc., and others use urine drug monitoring. But when the test is overused, say by being conducted every month instead of quarterly as is recommended, the members of the Philadelphia roundtable said its costs can outrun its usefulness.

Test results are frequently inconsistent, signaling that the injured workers aren’t taking the prescribed medication or are taking something they shouldn’t be. Drug testing shouldn’t be used in isolation but rather as a component of integrated medical management.

“What’s emerging today, and in some companies more prevalently, is the integration of managed care with pharmacy benefit management,” roundtable participant Valentic said.

In other words, it’s not enough to flag a script or pick up a urine drug monitoring test result. There needs to be a plan or a system in place that says what action should be taken with the patient once that information has been received.

Identifying a potential problem early and taking action on it is key, said ESIS’ Gleason. She added that the patient’s psychological state, including how they react to and perceive pain, is something that more risk practitioners should consider.

Obstacles to assessing someone’s psychological or psychosocial state, according to roundtable members, include a lack of awareness or acceptance of its possible advantages on the part of patients and physicians. After all, we’re talking about an assessment, a list of questions, that should take no more than 15 minutes to carry out.

If a treating physician or case manager doesn‘t conduct a psychological test but is still concerned about the potential for pain medication abuse, there is one key question they can ask an injured worker, according to AmeriHealth Casualty’s Dragoun.

“There is one question that predicts far more than any other attribute of a patient whether they are likely to abuse narcotics, and that is if they have a personal or family history of substance abuse,” Dragoun said.

“You know they may ask that about the patient, but I don’t know how many ask it about the family,” Patriot Care Management’s Kim Clark said.

Pharmacogenetic testing, that is testing an individual for how they might react to certain drugs or combinations of drugs, and not — let’s be clear about this — whether they are predisposed to addiction, is also entering the market.

But as is the case with urine drug monitoring, the use of pharmacogenetic testing is no cure-all and the cost of it needs to be carefully managed.

Some vendors are pitching that it be applied to every case in a payer’s portfolio. The roundtable participants in Philadelphia agreed that it should be used with far more discretion than that.

Regulating the Regulators

It’s a given in the insurance business and in workers’ compensation that regulators in all 50 states call the shots. There are few national laws that regulate the hazards faced by workers’ compensation risk managers and injured workers.

Having said that, is it really such a pipe dream to think that the federal government could step in and provide leadership in an area that is so prone to confusion, risk and self-serving behavior on the part of some vendors and medical practitioners?

If the Philadelphia roundtable as a group could point to one place where federal regulators could do some good it would be in the area of physician dispensing. Many states have enacted legislation to curb the practice, as there is no data to prove better outcomes, and regulation by the federal government would be of benefit, the Philadelphia roundtable concluded.

Another area would be to require FDA oversight for compounds.

“The minute you need to have FDA approval of a compound, that’s going to stop it,” Broadspire’s Valentic said.

It’s a notion worth considering. After all, lives are at stake here.

Given the lack of oversight from the federal government, the roundtable participants pointed to measures in a number of states that are worth emulating. The Texas closed formulary, which limits the range of medications that can be prescribed, is one example.

The requirement in the State of New York that a prescribing physician check a state registry — what’s known as a prescription drug monitoring program — to check whether a patient is already taking or has a prescription for a controlled substance, is another good example of a state government stepping in to ensure the safety of its residents.

“The minute you need to have FDA approval of a compound, that’s going to stop it.”

Pennsylvania also earned praise from the roundtable for recently passing a measure limiting the amount of medication that a physician can dispense to an initial supply.

With different regulations in every state and with the average wholesale cost of prescriptions constantly on the rise, pharmacy benefit management is an art requiring constant vigilance.

“It’s not an original thought, but if you stop and think about all the things that are happening in society with the addictions and the costs, the cost of doing nothing is greater than the cost of doing something.

Opinions of the roundtable participants are the opinions of each individual contributor and are not necessarily reflective of their respective companies.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Healthcare Solutions. The editorial staff of Risk & Insurance had no role in its preparation.

Healthcare Solutions serves as a health services company delivering integrated solutions to the property and casualty markets, specializing in workers’ compensation and auto liability/PIP.